High street stalwarts BHS and Austin Reed have both gone into administration after suffering from falling sales and margins in an increasingly competitive clothing market.
Much like the death of Woolworths, the fall of these once iconic brands represents yet another milestone in the gradual waning of the influence of the British high street. And in my opinion, there’s one crucial reason behind it: lack of innovation.
Once upon a time, BHS, Marks & Spencer, C&A and Woolworths were in a select band of retailers who were synonymous with the bustling high street. Although this year’s mild winter and late spring will have helped play a role in BHS and Austin Reed’s demise, the truth is they have been struggling for years.
BHS and Austin Reed arguably fit into a now well-defined pattern of big retailers losing touch with market trends and how their customers want to shop. While Next, John Lewis, House of Fraser and even Marks & Spencer have adapted, and moved with the times, these two brands stood still, stopped innovating and failed to respond to changing consumer behaviours, enabling their competitors to take centre stage.
Against a tidal wave of bricks-and-mortar and etail competition, they failed to frame their identities, differentiate their proposition and were alarmingly slow to respond to the ecommerce revolution.
Meanwhile, sales from bricks-and-mortar-led companies such as Primark and the online fashion specialists including Asos, Boohoo and Missguided have gone from strength to strength.
BHS and Austin Reed stood still, stopped innovating and failed to respond to changing consumer behaviours
Using our own data taken from the millions of transactions that fly through our platform every day, we’ve noticed another shift in consumer spend. While ecommerce transactions for retail of goods have been relatively stable, transactions for leisure and travel activities have doubled over the last 12 months. The UK consumer appears to be changing how he or she allocates available spend into other market segments.
While the demise of chains such as BHS and Austin Reed does not mean the end of the high street, it does highlight that retailers cannot afford to stand still. The new generation of “always on” consumers are empowered by a world of unlimited choices accessible any time and anywhere. This means that retailers need to focus on the needs of their customers more than ever before to stimulate sales and preserve margins.
Chris Harle COO at web services group PCA Predict and former CFO of M&M Direct